IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urnsici0015-2218(201212)684_445frdfct_2.0.tx_2-l.html
   My bibliography  Save this article

Fiscal Reforms during Fiscal Consolidation: The Case of Italy

Author

Listed:
  • Giampaolo Arachi
  • Valeria Bucci
  • Ernesto Longobardi
  • Paolo M. Panteghini
  • Maria Laura Parisi
  • Simone Pellegrino
  • Alberto Zanardi

Abstract

We discuss the strengths and weaknesses of the fiscal consolidation package adopted by Italy in 2011. Estimated at 3.3% of GDP, the tax measures were introduced to reduce public deficits without weakening the prospects of economic recovery or producing adverse redistributive outcomes. The tax reform mainly increases consumption and property taxes and gives relief for firms that recapitalize or hire young workers and women. To some extent, these measures are consistent with scholarly suggestions to foster short- and long-term economic growth by shifting the tax burden from capital and labor income towards consumption and property. Using microsimulation models, we evaluate the distributional and growth effects of the tax package. The indirect and property tax reforms are highly regressive, while the reform as a whole makes limited resources available for growth-enhancing policies, through a reduction in the effective corporate tax burden. We propose a revenue-neutral alternative reform that allows channeling more fiscal resources towards corporate tax relief, while at the same time producing less regressive distributional effects.

Suggested Citation

  • Giampaolo Arachi & Valeria Bucci & Ernesto Longobardi & Paolo M. Panteghini & Maria Laura Parisi & Simone Pellegrino & Alberto Zanardi, 2012. "Fiscal Reforms during Fiscal Consolidation: The Case of Italy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(4), pages 445-465, December.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201212)68:4_445:frdfct_2.0.tx_2-l
    DOI: 10.1628/001522108X659574
    as

    Download full text from publisher

    File URL: http://www.ingentaconnect.com/content/mohr/fa/2012/00000068/00000004/art00006
    Download Restriction: Fulltext access is included for subscribers to the printed version.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Paolo M. Panteghini, 2001. "Dual income taxation : the choice of the imputed rate of return," Finnish Economic Papers, Finnish Economic Association, vol. 14(1), pages 5-13, Spring.
    2. Calmfors, Lars, 1993. "Lessons from the macroeconomic experience of Sweden," European Journal of Political Economy, Elsevier, vol. 9(1), pages 25-72, March.
    3. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.
    4. Massimo Bordignon & Silvia Giannini & Paolo Panteghini, 2001. "Reforming Business Taxation: Lessons from Italy?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(2), pages 191-210, March.
    5. Robert Z. Ailber (ed.), 2001. "International Finance," Books, Edward Elgar Publishing, volume 0, number 525.
    6. Buti,Marco & Deroose,Servaas & Gaspar,Vitor & Martins,João Nogueira (ed.), 2010. "The Euro," Cambridge Books, Cambridge University Press, number 9789279098420, May.
    7. Edyta Mazurek & Simone Pellegrino & Achille Vernizzi, 2010. "The Decomposition of the Redistributive Effect and the Issue of Close Equals Identification," Working papers 16, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    8. Mervyn A. King & Don Fullerton, 1984. "The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany," NBER Books, National Bureau of Economic Research, Inc, number king84-1, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    2. Kayis-Kumar, Ann, 2015. "Thin capitalisation rules: A second-best solution to the cross-border debt bias?," MPRA Paper 72031, University Library of Munich, Germany.
    3. repec:ijm:journl:v10:y:2017:i:1:p:5-38 is not listed on IDEAS

    More about this item

    Keywords

    tax reform; fiscal consolidation; microsimulation; Italy;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:finarc:urn:sici:0015-2218(201212)68:4_445:frdfct_2.0.tx_2-l. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Wolpert). General contact details of provider: https://www.mohr.de/fa .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.